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Who's really failing Australia?

Come the federal election, voters will reward whichever party speaks the lines they want to hear – but these are just as likely to be myth as truth.

There are two schools of thought as to what the Gillard government should do with the time left to it – go for broke with a bold reform agenda because a condemned government has nothing to lose in doing so, or play cautiously to the opinion polls so as to retain as many seats as possible when the Coalition takes power.

Former investment banker and the man who conducted the review of Labor's 'school halls' BER program, Brad Orgill, makes the second case in The Australian today.

He writes: "The ALP may have only 33,000 members but its core voter base is about five million. These are ALP stakeholders too and they want an economically competent, centre-left political option. The prime minister, deputy prime minister and the 101 other members of caucus hold in their hands 121 years of ALP history and the aspirations of millions for a fairer, progressive Australian society.

"They have a responsibility to all stakeholders to ensure the next election is not a rout and that if they are to lose, they lose modestly and there is effective opposition."

Alister Drysdale made the opposite case on Monday (Gillard should forget the headlines, April 2). Gillard should set Australia up for prosperity regardless of the political cost, he argues, because all too soon voters will realise the value of that legacy.

These opposing arguments can be viewed through two lenses: what's best for Labor, and what's best for the Australian voter. Orgill's view is a prescription for healthy Labor Party, though he qualifies this position by saying a strong ALP opposition will stop an Abbott government getting cocky.

The latter point is valid, but the overall thrust of the argument overestimates the depth of understanding in the electorate of some of the big economic issues of the day. It is easy to forget that investment bankers, corporate directors and senior managers, and even public servants, spend a lot of time engaging in serious policy debate through publications such as The Australian, the Financial Review and Business Spectator. Most voters do not.

The biggest news media audiences – watching Channel Seven or Nine news and current affairs, listening to 3AW or 2GB talkback, reading the Herald Sun in Melbourne or The Daily Telegraph in Sydney, have for whatever reason come to believe some quite untrue propositions – as reflected in the opinion polls.

The ABC news audience, also very large, gets more sober coverage, and sections of the largish Fairfax broadsheet audiences probably also reject some of the propositions I list below – if, that is, they managed to find the important stories buried under mounds of lifestyle journalism.

Okay, there are some pretty broad brushstrokes there, but the point I'm making is that voters at large (and too many journalists) currently believe some pretty damaging stuff:

Firstly, that we have a huge debt and deficit problem. We do not. Pointing to the dramatic 'growth' in Labor issued debt during the GFC achieves nothing. The aggregate debt figures, though not ideal, are very low compared to nearly all other developed nations, and the debt that is there was used to preserve many Australian jobs during the GFC.

Secondly, the view – promoted by both sides of parliament – that it's responsible for the government to return to surplus in the coming financial year is nonsense. Six months ago that might have looked sane, but with Commonwealth revenues in sharp decline, the now extraordinary fiscal consolidation being promised by Wayne Swan (egged on by the Coalition) to balance the budget is being openly opposed by the Business Council of Australia. The big end of town knows that the surplus obsession will damage the economy.

Third is the idea that the mining tax will 'share the wealth' of the mining boom. Rubbish. The $11 billion expected by Treasury to flow from iron ore and coal miners into government coffers over the first three years of the tax may never materialise – commodity prices are weakening, yesterday's trade data was appalling, and even if volumes and price hold the big miners will mostly dodge the tax due to their large profits being offset by even larger investments. And there is a cloud hanging over how much of the MRRT revenue is actually 'shared' anyway – the Greens still want to block the linked company tax cut for big businesses, and much of the Labor's 'sharing' looks increasingly likely to be through social services for retrenched workers in sectors of the economy being punished by the high dollar (including thousands of retrenched public servants).

Fourth is the idea that the carbon tax is causing power prices, and prices of just about everything else, to spiral out of control. Robert Gottliebsen wrote yesterday that 7 percentage points of a looming 37 per cent rise in power prices will be due to the carbon price (The carbon revolt, April 4). Quite possibly – but in voters' minds, the lack of investment in power infrastructure and the current phase of catch-up capital spending – which account for the '30' in '37' – are virtually unknown.

There are many other myths floating about that could make the above list much longer, but the point here is that come the 2013 election, voters will reward candidates who argue the following:

– We MUST get into the black right now! (Don't mention the cost to the economy and the social pain that will follow). Both side will argue this position.

– The mining tax will sort out our two-speed economy problems! (Let's gloss over the fact that money is unlikely to flow, and if it does is unlikely to assist ailing non-resources sectors of the economy). Labor will keep arguing this position.

– We can blame just about everything on carbon pricing! (Let's forget the massive free permit giveaways, and direct subsidies to trade exposed industries.) This is the daily staple of the Coalition media message.

To get back to Orgill's and Drysdale's arguments, then, it's important to widen the net a bit to realise where good governance in this country is falling apart – not just in the poor design of the mining tax, or in rash decisions in Treasury, or even in putting up a carbon pricing scheme in highly uncertain economic times. Good governance is undermined every time journalists "write crap", as Julia Gillard put it, about either side of politics.

Labor should govern boldly to the end as Drysdale suggests – but if that results in the total electoral wipeout that Orgill fears, it's journalists who'll carry a lot of the blame.

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